According to a study conducted by Bizrate.com, a comparison shopping
site, online shoppers are becoming more aware of digital wallets --
encryption software that works much like a physical wallet during an online
commerce transaction -- but many have yet to use them.

According to the survey, 38 percent of the 14,000 shoppers polled were
familiar with the digital wallet -- a 3 percent increase in awareness over
last year. However, only 22 percent had actually used one for an online
transaction.

Meanwhile, 25 percent said they had heard of the term but were not sure
what the product was used for, while the remaining 37 percent of respondents
were completely unfamiliar with the product.

"There has been a lot of innovation in digital cash payment options,"
Avivah Litan, vice president of payment services at Gartner Group, told
internetnews.com. "However, none of these schemes are working well. The
market is driven by the payer and the payers prefer credit cards. Credit
cards are protected and everyone accepts them."

Credit cards are the dominant force in e-shopping, agreed James Van Dyke,
senior analyst at Jupiter Research. "More people were wary of using credit
cards on the Web, at first," he said. "They would make an order online and
then go to the phone or fax to send in their credit card data, or they would
mail in a check. Today people are more comfortable using their credit cards
for online purchases.

"The challenge is that credit cards were not designed for the Internet,"
he noted. "There is a need for a secure alternative. Right now, there is no
way to double check a signature or to guarantee who is placing an order.
Micro payment developments are in development and I believe that in the next
five years we will see a lot more innovation in this category."

Digital wallet use will lag behind in consumer awareness until the
benefits outweigh the learning curve, predicted Seth Geiger, vice president
of professional services at BizRate.com.

"Given the convenience and safety provided by digital wallets, savvy
online shoppers should begin to use them more often," he said. "Within this
category, five percent claimed to use digital wallets frequently, 12 percent
occasionally, and five percent choosing to no longer use digital wallets."

According to the study, online buyers familiar with digital wallets tend
to be younger males. However, buyers that frequently use the application
tend to be older females. Both groups purchase from a wider variety of
merchants and typically spend more online on average in a month compared
with those respondents unfamiliar with digital wallets.